Stocks rose to all-time highs on Tuesday as Wall Street shrugged off concerns over the economic impact of the coronavirus outbreak.
The Dow Jones Industrial Average climbed 57 points, or 0.2%. Earlier in the day, the 30-stock average hit a record. The S&P 500 advanced 0.5% while the Nasdaq Composite advanced 0.8%.
Cisco Systems, Dow Inc and Caterpillar all traded more than 1% higher to lead the Dow. However, a 0.5% decline in Boeing shares capped the average’s gains. The S&P 500 was led higher by the energy, real estate, materials and consumer discretionary sectors.
China’s National Health Commission on Monday night said the death toll had risen to 1,016 people with 42,638 confirmed cases. However, data from Johns Hopkins University showed the number of new confirmed cases was its lowest since late January, increasing optimism around the country’s efforts to contain the outbreak.
Fears over the economic fallout from the outbreak have also been offset by positive economic indicators. Jobs data released last week easily beat analyst expectations while U.S. manufacturing and services activity show signs of improvement.
Both the S&P 500 and Nasdaq Composite closed at fresh highs on Monday, while the Dow jumped more than 170 points.
Traders work at the New York Stock Exchange, February 4, 2020.
Bryan R Smith | Reuters
Bridgewater Associates founder and billionaire investor Ray Dalio said the virus’ impact on global markets may have been exaggerated.
“Because of the temporary nature of that, I would expect more of a rebound,” Dalio said at a conference in Abu Dhabi. “It most likely will be something that in another year or two will be well beyond what everyone will be talking about.”
However, companies such as Under Armour have noted they will take a hit from the outbreak. Under Armour warned Tuesday the outbreak could lower sales by $50 million to $60 million.
“While the stock market assumes no impact from the virus as we continue to chug higher, expect much more of this kind of talk as companies figure out the full effect,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “For many companies, these sales will not be made up.”
Under Armour shares dropped more than 16% as lackluster quarterly results also pressured the apparel maker.
In other corporate news, a judge approved a merger between T-Mobile and Sprint. Sprint shares soared more than 72% while T-Mobile advanced 10.6%.
On the data front, job openings fell to a two-year low in December, reaching 6.4 million. The Bureau of Labor Statistics said the biggest decreases in job openings came from transportation, utilities and educational services, among other sectors.
Federal Reserve Chairman Jerome Powell is testifying in front of the House Financial Services Committee. In prepared testimony, he said the central bank is “closely monitoring” the coronavirus situation for a potential hit to China and the global economy. During the Q&A portion of his testimony, Powell noted it is “too early to say” how the coronavirus will ultimately impact the U.S. economy.
—CNBC’s Elliot Smith contributed to this report.
